Court: United States District Court for the Northern District of California
Case Name: Sterling Sav. Bank v. Poulsen
Citation: 2013 U.S. Dist. LEXIS 105948
This case involved four loans that the defendant’s real estate investment company had taken from the plaintiff bank. The plaintiff brought a suit claiming a breach of a personal loan guarantee by the defendant. The defendant, in response, brought a separate action against the plaintiff, making allegations of elder abuse, fraud, and recission. The defendant argued that the signer of the loan documents was suffering from dementia at the time, constituting elder abuse by the bank. The defendant retained an elder abuse expert witness to support their claim, whose testimony was challenged by the plaintiff.
The Elder Abuse Expert Witness
The elder abuse expert witness was a financial consultant and Senior Assistant Professor at Golden Gate University School of Business. He was qualified as a specialist in the areas of finance, financial services, insurance, statistical analysis of various business activities and events, and planning and review of claims and liability modeling in the national and federal courts. At trial, he opined on financial elder abuse and concluded that the plaintiff had neglected the “Know Your Customer” policy as required by the Bank Secrecy Act that aims to prevent fraudulent and otherwise criminal activity. This, the expert asserted, set the stage for the inappropriate implementation of guaranties.
The court noted that the expert had extensive experience in the banking sector, but not in financial abuse of the elderly. His curriculum vitae did not suggest any familiarity in the California Elder Abuse Act or elder abuse in general, and the defendant did not indicate any relevant experience. It seemed to the court that he had only read several stories about financial elder abuse, which was not sufficient to qualify as an expert. Furthermore, the expert’s view of financial elder abuse was not confirmed by the papers that he read in preparing for his report, where he opined that the lack of customer contact was contradictory to the provisions of the California Financial Elder Abuse Act.
The expert’s report provided estimates on the defendant’s credit losses and industry lending standards and practices. In respect to a second loan, the expert argued that it was an example of a loan representing a substantive deviation from the standard banking procedure. The expert also claimed that a third loan debt had been paid out and that the plaintiff had no investment risk, and even a future advantage from a quick sale.
The plaintiff argued that the expert had no background as a loan officer or service provider to provide him with any specialized knowledge on credit issues. The court noted that even if he was qualified to take the position on the outstanding sums of the debts in this situation, his views were not useful as he failed to explain how he reached his decision, citing Beech Aircraft Corp. v. The United States. Thus, the expert’s opinion on the loans was simply a description of the emails and documents about each, without specifying how he reached his conclusion.
The court noted that the expert’s report also contained impermissible legal conclusions. For example, the expert argued that lack of customer contact violates not only the provisions of the “Know Your Customer” policy but also the criteria of the California Financial Elder Abuse statutes. He was prohibited from offering such an opinion.
The court granted the plaintiff’s motion to exclude the defendant’s elder abuse expert witness’s testimony.